A Shortcoming of Monetary Policy Is That

Multiple Choice

A shortcoming of monetary policy is that:

A) a severe recession may undermine business confidence to the degree that even a reduction in interest rate does not increase the investment.
B) a severe recession will increase the investment demand which contributes to inflation.
C) a severe recession will increase the interest rate and thus lowers the investment.
D) a severe recession will reduce interest rate and increases investment demand.